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Tag Archive | "National Commission on Fiscal Responsibility"

Capitol Thinking Podcast

National Commission on Fiscal Responsibility Convenes

Last week, the National Commission on Fiscal Responsibility convened its first meeting. The 18-member panel heard presentations from Ben Bernake, Chairman of the Federal Reserve, Peter Orszag, Director of the Office of Management and Budget, and Robert Reischauer and Rudolph Penner, both former directors of the OMB. The Commission is required to develop a plan by December 1 to reduce the deficit.

Dr. Orszag highlighted the Administration’s longer-term efforts to reduce the deficit, such as working with Congress to enact pay-go legislation and enacting health care reform legislation, which will reduce the deficit by $1 trillion during the next 20 years.

Mr. Reischauer advised the Commissioners to consider all categories of spending and any revenue options as they draft a proposal.  However, he stated that the health care reform law reduces Medicare spending significantly and that the CMS Chief Actuary has suggested that beneficiaries may have problems accessing medical services if the provider payment updates are implemented.

The Commission will next meet on May 26 on the Hill.

CMS Releases Guidance Documents on Medicare Part D Gap Discount Program

On Friday, the Centers for Medicare and Medicaid released guidance regarding the Medicare Part D coverage gap program established in the Patient Protection and Affordable Care Act and amended in the Health Care and Education Reconciliation Act of 2010.

Under the Medicare Coverage Gap Discount Program, manufacturers are required to provide a $250 drug rebate in 2010 for both brand name and biologics purchased during the coverage gap. For brand-name drugs and biologics purchased during the coverage gap beginning January 1, 2011, manufacturers are required to give a 50 percent discount to beneficiaries.

The guidance explains how CMS will account for the payments and discounts the manufacturers give to beneficiaries. The preliminary guidance also describes how Part D sponsors should determine applicable discounts for beneficiaries.

CMS is accepting comments on the preliminary guidance through May 14 and will issue final guidance after reviewing the public comments.

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President Obama’s Deficit Reduction Commission Recommendations

As we await the release of a deficit reduction plan from the Senate – either the Gang of Six or Sen. Kent Conrad (D-ND), it is worth reviewing the recommendations made by the President’s National Commission on Fiscal Responsibility and Reform.

On November 10, the co-chairs of President Obama’s Commission on Fiscal Responsibility and Reform released draft recommendations for deficit reduction. The Commission’s report to Congress is due by December 1; however, any recommendations must be approved by 14 of the 18 Commissioners. The draft presentation includes significant changes to reduce Medicare and health care costs, as well as Social Security and tax policies. While it is unclear whether the Commission can muster the votes needed to approve recommendations, these proposals could be considered in the Congressional debate on spending offsets and deficit reduction.

Among the guiding principles outlined in the draft document, co-chairmen Erskine Bowles and Alan Simpson urged:  (1) instituting cuts gradually and beginning in Fiscal Year (FY) 2012 so as not to disrupt the economy; (2) considering all budget items for possible cuts; (3) protecting the disadvantaged by focusing benefits on those truly in need and ensuring an affordable and sustainable safety net; and (4) reducing the long-term growth of health care costs.  The co-chairmen made five overarching draft recommendations:

1.   Enact tough discretionary spending caps and provide $200 billion in illustrative domestic and defense savings in 2015.

2.   Pass tax reform that dramatically reduces rates, simplifies the code, broadens the base, and reduces the deficit.

3.   Address the “Doc Fix” not through deficit spending but through savings from payment reforms, cost-sharing, and malpractice reform, and long-term measures to control health care cost growth.

4.   Achieve mandatory savings from farm subsidies, military and civil service retirement.

5.   Ensure Social Security solvency for the next 75 years while reducing poverty among seniors.

The draft proposal acknowledges the need to address the Sustainable Growth Rate (SGR) problem and proposes that the physician fee fix be fully offset “by asking doctors and other health providers, lawyers, and individuals to take responsibility for slowing health care cost growth.” The proposal calls for SGR cuts through 2015 with modest reductions while directing the Centers for Medicare and Medicaid Services (CMS) to establish a new payment system, beginning in 2015, to reduce costs and improve quality.  The co-chairmen explain that potential offsets and savings could include the following: (1) paying doctors and other providers less, improving efficiency, and rewarding quality by speeding up payment reforms and increasing drug rebates; (2) paying lawyers less and reducing the cost of defensive medicine by adopting comprehensive tort reform; (3) expanding cost-sharing in Medicare to promote informed consumer health choices and spending; (4) expanding successful cost containment demonstrations; and (5) strengthening the Independent Payment Advisory Board (IPAB).

The proposal also makes reference to additional ways to reduce health spending, such as:(1) placing dual-eligible beneficiaries in Medicaid managed care; (2) cutting Medicare payments for bad debt; (3) expanding ACOs, payment bundling, and other payment reform; (4) cutting federal spending on graduate and indirect medical education; (5) reducing federal spending on Medicaid administrative costs; (6) increasing nominal Medicaid copayments; (7) accelerating the phase-in of DSH payment cuts, Medicare Advantage (MA) cuts, and home health cuts included in the Affordable Care Act (ACA); (8) reforming Tricare to increase cost sharing for military retirees; (9) reforming Federal Employees Health Benefits (FEHB) retiree plans to increase cost sharing for federal civilian retirees; (10) establishing national standards for regulating and administering health insurance; and (11) converting the federal share of Medicaid payments for long-term care into a capped allotment.

In the long-term, the co-chairmen call for containing the total health care spending to gross domestic product (GDP) + 1 percent after 2020 by establishing a process by which to regularly evaluate cost growth and institute a means by which additional savings could be derived if projected savings are not realized. The draft proposal suggests evaluating a “robust public option and/or all-payer system in the exchange,” overhauling the fee-for-service system, and expanding the authority of the IPAB if health care costs grow faster than targets.

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Capital Thinking Podcast

Last week, the White House announced President Obama’s recess appointment of Donald Berwick as CMS Administrator. Dr. Berwick is a pediatrician and professor at Harvard University and the founder the Institute for Healthcare Improvement. He launched the“100,000 Lives” campaign to reduce the number of deaths attributable to medical errors in hospitals. He has previously served as Vice Chair of the U.S. Preventive Task Force, member of the Board of Trustees of the American Hospital Association, Chair of the National Advisory Council of AHRQ. Dr. Berwick was sworn in on July 12.

The Constitution provides an exception to the Senate confirmation process for nominations. When the Senate is in recess, the President may make a temporary appointment known as a “recess appointment” without Senate approval. President Obama is making the appointment during a recess in the middle of a session, so Dr. Berwick’s appointment will expire at the end of the following session or at the end of the first session of the 112th Congress. President Obama has made 15 recess appointments, not including Donald Berwick.

Senate Minority Leader Mitch McConnell, along with Republican Senators John Barrasso, Pat Roberts and Tom Coburn have objected to President Obama’s move noting that confirmation hearings had not been scheduled to allow for consideration of the nominee. Senate Finance Committee staff have responded to the announcement noting that Republicans have urged Leadership to expedite Dr. Berwick’s confirmation hearing and hold his hearing before Supreme Court Justice nominee Elena Kagan’s hearing.

Republicans on the Senate Finance Committee sent a letter to Chairman Baucus requesting a hearing on the appointment of Dr. Berwick. The letter requests a chance for Dr. Berwick “to present his qualifications for the position in the usual process” so as not to create “a shadow over his legitimacy and authority to serve as Administrator during a critical time for CMS.”  Republican members of the House Ways and Means Committee also urged a hearing with Dr. Berwick.

The Office of Management and Director Peter Orszag has announced that his last day at his post will be July 30.  President Obama announced that he will appoint Jack Lew as the new OMB Director. Mr. Lew currently serves as an aide to Secretary of State Hillary Clinton and previously worked as the budget director for former President Bill Clinton. Given the current budget deficit, the new OMB Director will certainly continue the focus on reducing the deficit.

The Chairmen of the National Commission on Fiscal Responsibility, former Republican Senator Alan Simpson of Wyoming and Erskin Bowles, former chief of staff to President Bill Clinton, spoke to the National Governor’s Association and relayed that Congress must examine any and all proposals to contain entitlement programs, particularly Medicare and Medicaid. The Commission is required to develop a plan by December 1 to reduce the deficit.

Prior to the August recess, the Senate is expected to consider the “Small Business Lending Fund Act” (H.R. 5297), which was introduced by Rep. Barney Frank (D-MA) to address the impact of the financial crisis on small businesses. The Senate will also consider the House-amended war supplementing spending bill before it adjourns. The House amended the Senate-passed bill to include Senator Herb Kohl’s (D-WI) legislation, the “Preserve Access to Affordable Generics Act,” which would ban agreements between brand name and generic drug manufacturers. Senator Kohl has called such agreements “one of the most egregious tactics used to keep generic competitors off the market leaving consumers with unnecessarily high drug prices.” The Generic Pharmaceutical Association, however, expressed opposition to the amendment noting that such agreements have, at times, allowed generic drugs to come to market before the patents of the name brand drugs expire.

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Capital Thinking Podcast

Congress to Consider Extenders Legislation This Week

This week, the House and Senate are expected to consider and vote on the “American Jobs and Closing Tax Loopholes Act” (H.R. 4213). House Ways and Means Committee Chairman Sandy Levin and Senate Finance Committee Chairman Max Baucus released the tax extenders legislation last week, which includes several health care provisions, including a six-month extension of the temporary increase in Federal Medicaid Matching Rate and extension of COBRA premium subsidy for individuals terminated on or before December 31, 2010. The bill would also provide an update to physicians for the remainder of 2010 and 2011. Payment rates would increase in 2012 and 2013 if spending growth is within reasonable limits. The bill provides an extra allowance for primary and preventive care in 2012 and 2013.

IRS Issues Guidance on Therapeutic Discovery Project Program

The Administration continues to rollout health reform regulations. Last week, the Internal Revenue Service released guidance on the Therapeutic Discovery Project Program that was established in the Patient Protection and Affordable Care Act. The health reform law authorized a two-year tax credit designed to encourage investments in new therapies to prevent, diagnose, and treat chronic diseases. Firms with 250 employees or less could receive up to 50 percent of the cost of biomedical research up to a maximum credit of $5 million. Applications for the credit are due on July 21, 2010. The IRS will make determinations of eligibility for credits no later than October 29, 2010.

National Commission on Fiscal Responsibility Reconvenes

The National Commission on Fiscal Responsibility will convene for its second meeting, this time on the Hill, on Wednesday. The meeting will be webcast at www.whitehouse.gov/live. The Commission has issued a request for comments and ideas to address the country’s fiscal challenges. Comments can be emailed to commission@fc.eop.gov and will be part of the public record.

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